Cascadia Weekly

Crude Developments

Tuesday, January 21, 2014

CRUDE DEVELOPMENTS: Advances in shale oil and natural gas production techniques—including horizontal drilling and hydraulic fracturing (“fracking”) to extract oil and natural gas from once inaccessible rock, together with accelerated bitumen mining (tar sands or oil sands)—have managed to considerably push back the peak of Peak Oil, that theoretical division where new energy reserves can no longer keep pace with increasing demand. Unfortunately, a lot of this newly extracted energy is carried on very old infrastructure.

More crude oil was spilled in U.S. rail incidents last year than was spilled in the nearly four decades since the federal government began collecting data on such spills, an analysis of data shows. Including major derailments in Alabama and North Dakota, more than 1.15 million gallons of crude oil was spilled from rail cars in 2013, according to data released from the Pipeline and Hazardous Materials Safety Administration (PHMSA).

By comparison, from 1975 to 2012, U.S. railroads spilled a combined 800,000 gallons of crude oil. The spike underscores new concerns about the safety of such shipments as rail has become the preferred mode for oil producers amid a North American energy boom.

The analysis does not include incidents in Canada where oil spilled from trains. Canadian authorities estimate that more than 1.5 million gallons of crude oil spilled in Lac-Megantic, Quebec, on July 6, when a runaway train derailed and exploded, killing 47 people. The cargo originated in North Dakota.

Nearly 750,000 gallons of crude oil spilled from a train on Nov. 8 near Aliceville, Ala. The train originated in North Dakota and caught fire after it derailed in a swampy area.

The Pipeline and Hazardous Materials Safety Administration doesn’t yet have spill data from a Dec. 30 derailment near Casselton, N.D. But the National Transportation Safety Board, which is the lead investigator in that incident, estimates that more than 400,000 gallons of crude oil were spilled there. The intense fire forced most of Casselton’s 2,400 residents to evacuate in subzero temperatures.

The Association of American Railroads, an industry group, estimates that railroads shipped 400,000 carloads of crude oil last year. That’s more than 11.5 billion gallons, with one tank car holding roughly 28,800 gallons.

Until just a few years ago, railroads weren’t carrying crude oil in 80- to 100-car trains. In 2010, railroads reported spilling about 5,000 gallons of crude oil, according to federal data. They spilled fewer than 4,000 gallons each year in 2011 and 2012.

But excluding the Alabama and North Dakota derailments, more than 11,000 gallons of crude oil spilled from trains last year.
Last week, the principal regulators of crude oil shipments by rail met with railroad and oil industry representatives to discuss making changes to how crude is shipped by rail, from tank car design to operating speed to appropriate routing. An overarching problem, however, is the aging infrastructure of the nation’s transportation network, unimproved for decades and unlikely to receive improvement funds from a paralyzed Congress for many election cycles.

Meanwhile, the trains keep coming, with nearly a dozen plans that have emerged since 2012 to ship crude oil by train to Northwest refineries and port terminals.

“Most media accounts to date have presented only a fragmented view of the developments, and government regulators are evaluating the projects largely in isolation from one another,” public policy researcher Eric de Place warned last year.

In Oregon and Washington, 10 refineries and port terminals are planning, building, or already operating oil-by-rail shipments, including four on the Salish Sea in Whatcom and Skagit counties. If all of the projects are built and operated at full capacity, they will put an estimated 22 mile-long trains per day on the Northwest’s railway system, greatly burdening it and increasing the chances of derailment and potential disaster for Northwest waters.

BP Cherry Point refinery has constructed a huge rail loop south of Grandview Road to handle crude oil shipments from North Dakota, and the Phillips 66 expects to complete a crude oil rail offloading facility at its refinery in Ferndale and begin operations by late 2014. The facility is designed to handle to 35,000 barrels per day. The BP refinery can handle twice that capacity, or 70,000 barrels per day. Joining them soon is the Shell refinery in Anacortes. The Tesoro refinery has already held this capacity for a number of years.

According to a second report released earlier this month by PHMSA, crude oil produced in North America’s booming Bakken region may be more flammable and therefore more dangerous to ship by rail than crude from other areas. But there is an added environmental dimension, as Northwest oil train projects designed to transport Bakken fuel from North Dakota may also be used to export Canadian tar sands oil, some of the dirtiest stuff that burns. In fact, if all of the oil-by-rail projects were built, they would be capable of moving nearly 800,000 barrels per day—that’s more oil capacity than either of the controversial pipelines planned in British Columbia. Counter-intuitive, perhaps, but a relative glut of crude from sources in the United States stands to actually provoke more intensive tar sands extractions, as Canada opens new markets to finance the development of tar sand reserves.

“Growing conventional oil, including tight oil, and oil sands production has created an urgent need for additional transportation infrastructure. New pipelines, expansions to existing infrastructure and increased transportation by rail are all required to meet this need for capacity,” the Canadian Association of Petroleum Producers announced in June.

At a time when the world needs to transition to cleaner energy, dirty, dangerous oil extraction is the poster child for what we should not be doing. It will get worse before it gets better.

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